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Economic Malays

Sep 25th 2015, 13:30 by The Data Team



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RACIALLY motivated scuffles and political demonstrations in Malaysia in recent weeks are the latest of the many difficulties facing its prime minister, Najib Razak. Formed in 1963 from a confection of sultanates previously under British rule, Malaysia sits at the heart of South-East Asia, split into two parts either side of the South China Sea. A peninsula bordering Thailand is home to most of its people; the states of Sabah and Sarawak, meanwhile, perch on the north coast of the island of Borneo.

GDP per person of around $11,000 ($25,000 at purchasing-power parity) makes Malaysians the third-richest in their region, behind only the small countries of Singapore and Brunei. A little over half of them are ethnic-Malay Muslims; they—along with assorted other indigenes—make up the two-thirds of citizens whom the Malaysian government classes as bumiputra, or "sons of the soil". The next largest ethnic group are Chinese Malaysians, who account for about a quarter of its citizens, followed by ethnic-Indians (about 7%). This multiculturalism makes Malaysia a zingy and colourful place. On the whole society is harmonious and, at least in the cities, well integrated, with English used as a common tongue.



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The country's politics largely divide along ethnic lines. Malaysia's dominant party is the United Malays National Organisation (UMNO), a moderately-Muslim outfit. Coalitions led by UMNO have held power since independence in 1957, but lately have lost ground to a multi-ethnic coalition called Pakatan Rakyat, founded by Anwar Ibrahim—a former UMNO star dumped from the party in the late 90s after challenging for its leadership. At the most recent polls in 2013, the three parties in Pakatan won the popular vote for the first time, but failed to capture enough seats to take power from Barisan Nasional, the grouping led by UMNO.



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Since then Malaysian politics has looked less stable, and more poisonous, than it has for decades. Some in UMNO think the party should stand by Mr Najib, who denies wrongdoing after a report in the Wall Street Journal in July alleged that almost $700m had entered the prime minister’s bank accounts shortly before the election. Others want to ditch him, for fear he will lead them to their first ever electoral defeat at elections in three years' time. UMNO looks ever less inclined to reign in Malay-chauvinists on its fringes, and more tempted to harry its opponents through the courts. In February Mr Anwar was jailed, for the second time, on an iffy sodomy charge. UNMO has lately taken to claiming that its critics are part of a plot to topple the government, backed by foreign media.



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All this is happening at a tricky time for Malaysia's economy. Though the country is growing less dependent on its big oil reserves, low prices for hydrocarbons (and for other commodities, such as palm oil) have hit it hard. The value of its currency, the ringgit, has plummeted by 24% since January; foreign investors are selling its stocks. Neighbouring economies, such as Indonesia's, are also troubled, but Malaysia will find it more difficult to bounce back while its politics look so unsettled.



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Malaysia's leaders are adamant that its economy will outgrow the league of "middle-income" nations by 2020. But its long-term economic prospects depend on some unpopular reforms—not least to the discriminatory laws that guarantee bumiputra goodies, including reserved university places and the right to own a portion of shares in quoted companies. These were supposed to narrow inequality between Malays and their wealthier ethnic-Chinese compatriots, following race riots in the 1960s. Since then Malay incomes have risen rapidly. But greater equality has come at a cost. Critics say that state-sponsored favouritism has hooked Malays on handouts and government jobs, and helped to enrich the country’s elites. They are doing little for the poorest while promoting a brain-drain of dynamic Malaysian Indians and Chinese.

Most ordinary Malaysians reject racial rhetoric. But with more ethnic-Malay gatherings in the offing, the risk of more serious altercations is rising. Mr Najib had seemed prepared to reconsider those policies, when he took office in 2009. But that all seems a long time ago.

Correction: An earlier version of this article overstated Malaysia's GDP per person. Sorry.

Stick–in-the-mud

Beset by scandal, Najib Razak nevertheless seems safe in his job as Malaysia’s prime minister

Dec 5th 2015 | From the print edition



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IN ANY country, a leader who received deposits of nearly $700m in a personal bank account from an unnamed donor in the Middle East for unspecified purposes would find his position under scrutiny. Najib Razak, Malaysia’s prime minister, is no exception. Ahead of a general assembly starting on December 8th of his party, the United Malays National Organisation (UMNO), one of his predecessors, Mahathir Mohamad, published an open letter calling for the umpteenth time for his resignation. But the biggest risk facing Mr Najib at the assembly is the trivial embarrassment of a spot of booing and heckling; politically, he is unassailable. That may be good news for Mr Najib’s many friends abroad. What it says about Malaysian politics, however, is profoundly depressing.

Mr Najib has denied any wrongdoing in receiving the money, in 2013, or making any personal gain. Malaysia’s anti-corruption commission confirmed that the money had come from donors and was not, as had been alleged, siphoned off from a troubled state investment fund called 1MDB, whose advisory board Mr Najib chairs. So the prime minister does not face any serious legal threat. But in many countries, even tangential association with the kind of murky scandals surrounding 1MDB would have been enough to finish a politician’s career. Detailed stories of alleged impropriety at the fund have appeared in the international press. One recent twist involved allegations that a murdered public prosecutor, whose body had been found in a river in a cement-filled oil drum, had been investigating 1MDB. Mr Najib has shrugged off all the mudslinging as malicious innuendo spread by his political opponents. He earlier weathered another kerfuffle, over bribes allegedly paid when Malaysia bought French submarines during his time as defence minister in the early 2000s.

Apart from a few malcontents, most notably the nonagenarian Dr Mahathir, his party seems to be behind him. As Jahabar Sadiq, who runs a well-informed website, the Malaysian Insider, puts it, Mr Najib has “bested his master” (Dr Mahathir) and is “sailing on, as grandly as a gondola”. Dr Mahathir played a big role both in installing his immediate successor, Abdullah Badawi, and in replacing him with Mr Najib in 2009 after a disappointing election result the previous year. The next election, in 2013, went even worse for the coalition that UMNO heads: it lost the popular vote and only clung on to power thanks to gerrymandered constituencies. But Dr Mahathir’s dire warnings that UMNO faces doom at the next election, due in 2018, sound increasingly like the impotent rants of a cranky has-been.

This is in part a tribute to Mr Najib’s skill at playing politics the Malaysian way. The son of a former prime minister, he has spent a lifetime learning how to pull the levers of patronage and punishment. Many delegates at UMNO’s assembly will have personal reasons to feel thankful to him. And no obvious rival has emerged within UMNO. Of those conceivably in the frame, none seems likely to fare any better at the polls than Mr Najib. As for the opposition, it is in disarray. The leader of the coalition that won the most votes in 2013, Anwar Ibrahim, is in jail, on what many believe to be trumped-up charges of sodomy. Mr Anwar managed to bridge a coalition including a party appealing largely to the ethnic-Chinese minority (nearly a quarter of the population) and an Islamic party appealing to ethnic Malays. Without Mr Anwar’s unifying figure, that coalition has splintered, and its successor has a narrower appeal.

Mr Najib also seems to have learned from Dr Mahathir, who, facing political difficulties in 1987, locked up more than 100 critics under the colonial-era Internal Security Act. Mr Najib’s administration has repealed that act. However, it has made ample use of the similarly draconian Sedition Act to charge opposition politicians, journalists and critics of all sorts. One, a cartoonist known as Zunar, faces no fewer than nine sedition charges and a possible 43 years in prison. He is challenging the constitutionality of the act itself, but believes there is “no hope at all” of winning.

In Kuala Lumpur for the East Asia Summit last month, President Barack Obama could not entirely ignore the domestic criticism of Mr Najib. In private he reportedly called for Mr Anwar’s release, and perhaps was told that the judiciary is free from political interference. But Mr Obama was restrained. He and Mr Najib get on. They played golf in Hawaii last Christmas. Mr Najib is urbane, charming and plays up Malaysia’s strengths. It is a bastion of moderate Islam, an important ally against Islamist extremism. Thanks to Mr Najib, it agreed to the region’s American-led free-trade pact, the Trans-Pacific Partnership, which is unpopular in Malaysia. The prime minister also gets on well with China, one of whose state-owned firms helpfully agreed to buy some of 1MDB’s assets. And Malaysia had a successful year, just concluded, as chairman of the Association of South-East Asian Nations, and host of its various summits.

A dangerous course

So at home and abroad, many have reason to cheer Mr Najib’s ability to roll with the punches. And with the economy growing at about 5% a year, he can probably also survive a weakening currency and grumbles about rising prices. But angry critics point to the costs; they draw comparisons to Ferdinand Marcos’s Philippines (not least because Mr Najib also has a wife known for her love of shopping—Zunar depicts her with multiple posh handbags). They see three big risks: an erosion of the integrity of Malaysian institutions, from the judiciary to the central bank; a more frequent resort to repression to stifle criticism; and, perhaps most worrying, an ever-increasing role for race and religion in Malaysian politics. Mr Najib presents himself as both the defender of the Muslim-Malay majority, and as the best protection the Chinese and Indian minorities have against resentful and assertive Malay political dominance. He is adept at balancing acts.

Race in Malaysia

Playing with fire

A floundering government risks igniting ethnic tensions

Sep 26th 2015 | KUALA LUMPUR | From the print edition



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THE close-packed shops on Petaling Street (pictured), a dim warren in a Chinese quarter of Kuala Lumpur, Malaysia’s capital, often throng with bargain-hunting tourists. This month its mostly ethnic-Chinese stallholders faced crowds of a different kind. Riot police prevented a mob of redshirted protesters—ethnic Malays with a host of grudges—from marching down the street. They eventually dispersed loiterers with water cannon. One protester was filmed calling a journalist a “Chinese pig”. Some are threatening to return.

The unsettling scuffle took place on the fringes of a big pro-government rally held in the capital on September 16th. Some 40,000 ethnic Malays gathered at a park in support of the United Malays National Organisation (UMNO), the party that has led Malaysia’s ruling coalitions for nearly 60 years. The day’s events were only the latest evidence of rising tensions between the country’s Malay Muslim majority and its ethnic Chinese and Indian minorities, who make up about one-third of its citizens. Battling allegations of corruption, UMNO seems careless of the risks.

Malaysia’s broad ethnic mix, in part the result of British colonial immigration policies, has long coloured its politics. After a murderous race-riot in 1969, in which mobs burned Chinese shops, officials devised a slew of measures aimed at defusing tensions. Their aim was to reduce inequality between Malays and their richer ethnic-Chinese compatriots. Malays were guaranteed a quota of places at universities and the right to own shares in all listed companies, among other benefits. Though billed as temporary, many of the measures are still in force.

Since then Malay incomes have risen rapidly (see chart). But greater equality has come at a cost. Critics say that state-sponsored favouritism has hooked Malays on handouts and government jobs, and helped to enrich the country’s elites—at the same time as enraging ethnic-Chinese citizens, and driving some of the most talented of them abroad. There have been growing demands, among Malays too, for the rules to be scrapped, or at least refocused on the neediest regardless of their race. When he came to power in 2009 Najib Razak, UMNO’s president and Malaysia’s prime minister, sounded as if he agreed.
All that changed after a general election in 2013, when the government retained power despite losing the popular vote. UMNO itself managed to gain seats at the polls. But voters deserted the small ethnic-Chinese and Indian parties with whom it rules in coalition, fleeing to a resurgent and more ethnically balanced opposition. Instead of trying to lure them back, UMNO has focused on refurbishing its reputation as a champion of ethnic Malays and of Islam, their traditional religion. As well as losing interest in reforming discriminatory policies, it has become less disapproving of religious types appalled by pop concerts, dog-petting and women’s gymnastics. It is playing along with Islamists who are trying to introduce strict sharia punishments in a devout northern state.

Malay chauvinism has accelerated sharply amid a political crisis which began in July, when a report in the Wall Street Journal alleged that almost $700m had entered the prime minister’s bank accounts shortly before the election. Mr Najib denies any wrongdoing; Malaysia’s anti-corruption commission says the money was a legal political donation from unnamed Middle-Eastern benefactors. A hasty cabinet reshuffle ousted dissenters within UMNO, but elevated pro-Malay hardliners in their place. The party has taken to claiming that its critics are part of a plot to topple the government, backed by foreign media.


Malaysia in graphics

In particular, spin doctors have demonised the tens of thousands of Malaysians who called for Mr Najib’s resignation at peaceful demonstrations in August, which were organised by Bersih, an electoral reform group. Angered at what looked like efforts to derail official inquiries into the Journal’s allegations, citizens from all Malaysia’s races attended—though ethnic-Chinese protesters were most numerous. The authorities railed against a handful of rally-goers seen stamping on photos of Mr Najib; bigwigs in UMNO accused the protesters of disrespecting all Malays. In mid-September grim footage emerged of low-ranking UMNO members burning effigies of two ethnic-Chinese opposition leaders, which they had dressed in Bersih’s signature yellow shirts.

Organisers of this month’s big counter-rally—leaders of Malay organisations with links to the ruling party—lamented the sad sideshow in Petaling Street. But they insisted that the main red-shirted gathering was an essential response to the provocations and humiliations which Bersih’s protest is said to have caused. In a speech on September 18th Mr Najib congratulated participants in the red-shirt rally: he implied that Bersih’s demonstration had “slapped” ethnic Malays. The previous day his new deputy, Ahmed Zahid Hamidi, had said that Malays would “rise to defend our dignity” when “pushed against a wall”.

Most ordinary Malaysians reject racial rhetoric. But with more red-shirt gatherings in the offing, the risk of more serious altercations is rising. The spats are distracting the government from tricky and badly needed social and economic reforms. They are also worrying ethnically pluralist neighbours, such as Singapore, which frets about infection.

As this year’s chair of ASEAN, a group of South-East Asian states eyeing closer integration, Malaysia had pledged to promote a more modern and prosperous region. It is sinking deeper into its past.
A grand day out

All latest updates

Malaysia's masses protest against corruption

Large but orderly marches keep the pressure on an embattled prime minister

Aug 30th 2015 | KUALA LUMPUR | Asia



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TO LISTEN to the dire pronouncements from Malaysia's authorities, you might have expected a riot. But the big rally which took place in Kuala Lumpur this weekend, organised by Bersih—an electoral reform group angered by allegations of corruption in government—was a calm and joyful affair. Bersih (which means "clean" in Malay) reckoned that 200,000 marched to the capital's central square on Saturday afternoon to demand the resignation of the prime minister, Najib Razak; the police pegged the crowd at 30,000. Almost everyone wore Bersih's signature yellow T-shirts—despite the government's claim, at the eleventh hour, that they were illegal. One yellow-swathed campaigner waved a sunshine-yellow placard: "You can ban a T-shirt", it read, "but you can't ban an idea".

The rally began at 2pm on Saturday and continued overnight. Parents came with teenage and grown-up children (infants were discouraged). Supporters on Twitter quoted lines from "Les Misérables", and at least one rally chief tried to lead crowds in some of its tunes. A few campaigners sported bags that read "My prime minister embarrasses me"; one handy protester had carved a pint-sized model of Mr Najib from polystyrene, which perched on a swing inside a cage.

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Beset by scandal, Malaysia’s prime minister cracks down on dissent

Mr Najib has been on the back foot since early July, when a report in the Wall Street Journal alleged that payments of nearly $700m had entered his bank accounts in 2013 (he denies wrongdoing, and says he has never used public money for personal gain). The government said the rally was illegal, and blocked the organisers' website. The state news agency quoted Mr Najib as saying that the protesters appeared "shallow and poor" in their patriotism for holding the rally so close to Malaysia's independence day, which falls on Monday. Students were warned that joining the protests might endanger their scholarships; the foreign ministry said it would identify Malaysians participating in assemblies held in solidarity abroad. One big worry was the promise made by a pro-government group to hold a counter-rally. Its leader had claimed to be planning training sessions for participants which would involve swords and long knives.

As it turned out, police presence was low-key, and its leadership pragmatic. The careful organisation of the protest doubtless helped. Having accepted that they would not be allowed to enter the capital's main square, organisers erected their own barriers at its entrance to keep protesters away from police lines. Where roads remained open to traffic—and initially only those closest to the square were closed—stewards parted the crowds for public buses, which chugged on incongruously. Law students with gas masks, who stood ready to advise any detained protesters, had little to do but observe.

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Malaysia's economic and political malaise, in graphics

Assuming the protest concludes peacefully on Sunday night, Bersih's rally will mark a big step forward for civil society in Malaysia, where the culture of protest is still nascent. In the past similar demonstrations have been dispersed with water cannon, tear gas and arrests. This time the government's panicky and ultimately unenforced ban on Bersih T-shirts has served only to convince protesters that such edicts can in future be ignored. One shadow was the relative paucity of ethnic-Malays in a rally dominated by Malaysian Chinese. To some observers that confirmed worries—vigorously denied by the protest's organisers—that the country's politics is dividing more firmly along ethnic lines.

Few attendees expect the demonstration to bring immediate change. But the prime minister's opponents got a big boost on Sunday afternoon, when Mahathir Mohamad—an elder statesman who has for many months called for Mr Najib to step down, and who stopped briefly at the rally on Saturday—returned to make a supportive statement. Attention now shifts to a big international conference on corruption, which—quite by chance—is being held near Kuala Lumpur from September 2nd. It is still not clear whether the prime minister will attend.

Politics in Malaysia

No more Mr Nice Guy

Beset by scandal, Malaysia’s prime minister cracks down on dissent

Aug 29th 2015 | KUALA LUMPUR | From the print edition



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DOWN a quiet lane in Kuala Lumpur, Malaysia’s capital, campaigners at trestle tables are doing a roaring trade in yellow T-shirts. The volunteers have already flogged more than 30,000 of the garments, which are becoming de rigueur for Malaysians planning to attend protests on August 29th-30th to demand the resignation of the country’s prime minister, Najib Razak (above). The protests are being organised by Bersih (meaning “clean” in Malay), a loose union of non-government groups calling for electoral reform. In 2012 police dispersed thousands of Bersih protesters with tear gas and water cannons and arrested about 500. This weekend’s rally in Kuala Lumpur, which authorities say is illegal, could yet go the same way. Maria Chin Abdullah of Bersih hopes that at least 200,000 Malaysians will protest in three cities. Malaysia’s political system, she says, “has really become quite rotten”.

The planned protests are the latest turn in a wild saga which has gathered pace since early July, when the Wall Street Journal reported that nearly $700m had found its way into bank accounts owned by Mr Najib shortly before a close-fought general election in 2013. Much has been made of the suggestion that the money is somehow linked to 1MDB, a state investment firm struggling to service debts of around $11 billion. Its dealings are now the subject of an investigation in Switzerland, through which some of its cash may have passed.

In this section

Mr Najib vigorously denies the suggestion and says he has never used public money for personal gain. Rather, senior members of his party, the United Malays National Organisation (UMNO), assert that the prime minister received a legal political donation from a wealthy but as yet unnamed Arab family which approves of UMNO rule. On August 22nd local media reported one party chief as saying that UMNO had hoped the cash would help it reverse gains being made by a popular ethnic-Chinese opposition party, which he claimed was backed by clandestine Jews.

Digging in

The prime minister’s opponents say he is dodging a proper investigation. In July he sacked his deputy, who had begun to question his handling of the affair, and promoted to the cabinet several members of a committee which had been arranging hearings into alleged mismanagement at 1MDB. In short order the attorney-general was replaced (supposedly on health grounds), a pesky police chief was retired and several members of the country’s anti-corruption commission pushed aside.

The media is under the cosh too. A government agency has suspended the printing licences of two troublesome newspapers, while ministers say they are mulling new rules to curb speculation on social media. In August police issued an arrest warrant for Clare Rewcastle Brown, a British investigative journalist living in London (and sister-in-law of Gordon Brown, a former British prime minister); her blog, the Sarawak Report, has closely covered the affair. The charge against her, of participating in “activity detrimental to parliamentary democracy”, reflects the government’s contention that its critics are part of a sinister conspiracy.

The crackdown has underscored the weakness of Malaysia’s institutions and displayed a new ruthlessness in Mr Najib. An urbane, British-educated scion of a political family, he seems to have abandoned earlier efforts to paint himself as a reformer. But he is digging in. Meanwhile the state of the economy, which Mr Najib had claimed to be carefully tending, grows more parlous. The country is running down foreign-currency reserves to prop up the ringgit, down by more than 16% this year. A slowing China and falling prices for commodities triggered the currency slide, but the political drama has accelerated it.

Mr Najib’s resilience says much about the dominance of his party, which has led Malaysia’s ruling coalitions for six decades. UMNO is easily the most popular party among ethnic-Malay Muslims, who make up more than half of the population and who trust the party to defend racial laws that give them a leg up over their ethnic-Chinese and ethnic-Indian compatriots. Gerrymandered electoral districts, compliant courts and the use of colonial-era sedition laws have helped it to shore up its power—even when, as in the last election, the opposition won most of the votes but a minority of seats in parliament.

The main risk of being turfed from office comes from within the party. It is why UMNO bigwigs have long fostered deep lines of patronage that make them hard to budge. The party hierarchy has tended to reward loyalty over ability and to punish upstarts. Even a torrent of criticism from UMNO’s senior statesman, Mahathir Mohamad, who saw off several challengers himself while prime minister from 1981 to 2003, has failed to unbalance Mr Najib.

In private many MPs from his party express little enthusiasm for the prime minister. But nor do they spy challengers whom they would risk their careers to support. The recent sackings have been a bracing reminder of what happens to critics. Some in UMNO have grown guarded about what they write in e-mails or say on the phone. It is lost on no one that Mr Najib’s new deputy prime minister is also the country’s home minister, responsible for its police. The fate of Anwar Ibrahim—a former UMNO star who went across to the opposition and who is in jail, for the second time, on an iffy sodomy charge—is a reminder that demotion is not the worst punishment Malaysian politics can impose.



At some point Mr Najib’s plunging popularity may be perceived to imperil an UMNO victory at the next general election. At that point the cleanest way for party dissidents to defenestrate the prime minister would be at UMNO polls for the party leadership. Yet these have been postponed by 18 months, perhaps to see off just such a threat. A more imminent challenge is a vote of no confidence which opposition politicians plan to force through when Parliament reconvenes in October. The hope is that enough parliamentarians from the UMNO-led ruling coalition will back the idea of a technocratic government, drawn from both sides, which would hold power until the general election, due in 2018. One possible candidate for prime minister is Razaleigh Hamzah, an elder statesman popular among business leaders.

This scheme remains unlikely, but it could get a boost if many tens of thousands of Malaysians take to the streets on August 29th. Yet it is also possible that the protest could end up rallying ethnic-Malay support for Mr Najib. Recent rifts in the multi-ethnic opposition have led to worries that many ethnic-Malay supporters of the opposition and of previous Bersih rallies may not turn out this time. The risk is that a big rally dominated by ethnic Chinese and Indians would inflame the pernicious sore, scratched on UMNO’s fringes, that the country’s Islamic heritage is under threat from non-Malays. That is a fiendish trap.


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